Calling the depreciation in the rupee's dollar value “a matter of grave concern”, Union Finance Minister Pranab Mukherjee on Sunday said the Centre was watching the situation and working towards arresting the steep fall.

“I know there are certain areas of grave concern including the [fall in the] rupee. The way it is depreciating against [the U.S.] dollar is a matter of grave concern,” Mr. Mukherjee told journalists outside his residence in the city.

Emphasising that the government was working to ease the crisis, Mr. Mukherjee said the depreciation in the rupee was due to the prevailing fiscal situation in the eurozone.

“We are watching the situation but it is closely linked with the uncertainties in the eurozone,” he said.

Pointing out that several countries across the world were dealing with “currency fluctuation”, Mr. Mukherjee said the phenomenon was evident, particularly in the “emerging market economies”.

“There has been currency fluctuation in Korea and certain other countries also…I think in Brazil and Mexico [too] there has been currency fluctuation,” he said.

The rupee slipped to an all-time low earlier this month. On May 16, it touched 54.51 against the U.S. dollar, compared with its previous historical low recorded in mid-December 2011 of 54.30.

On Friday, in early trade, the rupee threatened to breach the 55-level as it slumped to 54.91 against the greenback.

Last week, the Bombay Stock Exchange benchmark Sensex dipped below 16,000 points for the first time in four months, even as the slide of the rupee continued.